A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 March 31 June 30 October 30 Accumulated expenditures Average accumulated expenditures Expenditure $ Answer is not complete. Weight $ 600,000 XX 500,000 XX 700,000 XX 900,000 XX $ 2,700,000 Amount 0 Interest Rate % % = = = = = = $ $ Average Capitalized Interest $ 0 0 0 0
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 March 31 June 30 October 30 Accumulated expenditures Average accumulated expenditures Expenditure $ Answer is not complete. Weight $ 600,000 XX 500,000 XX 700,000 XX 900,000 XX $ 2,700,000 Amount 0 Interest Rate % % = = = = = = $ $ Average Capitalized Interest $ 0 0 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for
construction were as follows: January 1, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance
construction, the company arranged a 7% construction loan on January 1 for $700,000. The company's other borrowings, outstanding
for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively.
Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year.
Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage
answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).
Date
January 1
March 31
June 30
October 30
Accumulated expenditures
Average accumulated expenditures
Answer is not complete.
Weight
Expenditure
$ 600,000 XX
500,000 XX
700,000 XX
900,000 XX
$ 2,700,000
Amount
$
0
Interest Rate
%
%
=
=
=
=
=
$
$
Average
Capitalized
Interest
$
0
0
0
0
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